Surge in profits is expected for IG Group

Jun 10 2010 by Iain Laing, The Journal

SPREAD betting firm IG Group has said it is expecting a 25% leap in full-year profits after recent stock market turbulence boosted business.

It has seen a surge in client activity and new account openings as investors sought to take advantage of heightened volatility in equity and currency markets caused by the eurozone debt crisis.

IG Group said revenues rose 24% in its final quarter, which had put it on course for annual underlying pre-tax profits of around £157m on sales 16% higher at an estimated £298m.

The firm’s shares raced 8% higher on news of the profits boost.

IG opened 21,500 accounts in the three months to May 31, up on the 18,750 seen a year earlier.

Stock markets globally have been thrown into turmoil since debt woes in Greece sparked off fears of a Europe-wide crisis.

Around 13% has been wiped off the FTSE 100 Index since mid-April, while the Dow Jones Industrial Average has slumped back below the key 10,000 mark.

And in currency markets the euro has been hit hard, slumping to four-year lows against the dollar.

IG said: “It remains difficult to predict future trends in volatility or customer reaction to changing market and economic conditions.

“Strong account opening and the continued development of the group’s offering leave the group well-positioned for further growth.”

IG said business was higher across all its operations – in the UK, Europe, Australia and Japan.

The UK saw sales of £162m up 8% year-on-year, boosted by a 17% hike in the final three months.

The profits guidance is higher than expected in the market, with analysts having originally pencilled in profits of between £126m and £153m.

Analysts at Singer Capital Markets said that despite the lack of visibility over future trading conditions, IG Group’s prospects for the year ahead were also looking positive, with the potential for earnings upgrades.